Originally published on Jan 7, 2004
By Juan Blanco Prada
It has been a year since Luis Inácio Lula da Silva, known as Lula, became president of Brazil. Lula was elected by a landslide on a platform that vowed to change the economic policies of structural adjustment, privatization and radical cuts to services implemented under the banner of neoliberalism.
Although the neoliberal recipes provided a sustained reduction of inflation rates, they also proved to be a complete failure in addressing Brazil’s most urgent problems: hunger, widespread poverty, lack of health care and a deficient education system.
Lula was elected with the support of a coalition of left and moderate parties, with a clear mandate to steer the country in a new direction, and prioritize social programs and economic growth over financial orthodoxy and so called “free-trade” policies.
After a year in power, his administration has been a mix of surprising (or disappointing, depending on who is looking) orthodox domestic policies and fiercely independent stances on the international arena.
Lula’s administration has gone beyond the IMF requirements of primary surplus (the money used to repay debts) and kept the high interest rates that restrain growth and job creation but attract speculative, short-term investments.
Perhaps the most surprising measure of his administration was the approval of a reform of the Brazilian Social Security that reduced benefits and raised retirement ages. Such reform was a long time goal of the “free-market” advocates, which had been successfully blocked by Lula’s own Worker’s Party during its years in the opposition.
Those measures have helped his administration win the support from unlikely quarters such as the IMF and other international guardians of the neoliberal order, as well as giving the Brazilian currency a strength that many believed impossible to attain. For the first time since 1966, the Brazilian currency has actually gained value before the US dollar.
What the markets see as signs of realism and fiscal responsibility, Lula’s critics, which happen to be those who helped elect him, perceive as either surrendering to the pressure of the financial institutions, or the lack of a plan to achieve the social justice oriented reforms he promised to the Brazilian electorate. Their point is strongly supported by the fact that Brazil’s growth rate has not improved, thus maintaining the high unemployment rates that characterized the previous administration. Furthermore, Lula’s administration has not increased funding for social programs, merely rearranging existing funds while his signature program, Zero Hunger – a food security program that doesn’t address the causes of Brazil’s poverty – has been plagued with poor design and mismanagement.
However, in the international arena, and particularly in the negotiation of trade agreements, Lula’s administration has delivered most of its promises and lived up to the expectations it raised for the world’s left. In doing so, Lula has elevated Brazil to the unlikely situation of successfully leading the opposition to a number of international initiatives dearly supported by the Bush administration.
Brazil’s diplomacy has a history of independence, with a long-standing tradition of not aligning itself with any of the global powers. It is no coincidence that the UN selected a Brazilian to head its mission in post-Saddam Iraq, the late Vieira de Mello.
Lula has brought this tradition of independence to a whole new level, putting Brazil in a position of international leadership that was unheard of until now.
Brazil was the major architect in the creation of the G-22, a group of 22 nations that includes such Third World heavyweights as China, India, Indonesia, and South Africa. The G-22 was responsible for the collapse of the WTO talks in Cancun, leading the refusal of the poor to go along with further removal of trade barriers for investments and services that benefit the North, while maintaining the heavily subsidized advantages for its agribusinesses, thus limiting the only competitive advantage the poor nations actually have in international trade.
Later on, Brazil also led the South American nations in its refusal of the FTAA in Miami. In both occasions, trade officials of the Bush administration were forced to come up with “half-full” explanations of what actually represented major failures of the White House trade policies. No wonder the results of both summits were met with jubilant demonstrations of anti-globalization protesters and social justice organizations.
Not only on trade issues has Lula’s administration become a serious nuisance for Bush’s hard line approach to international affairs. Lula has restored Brazil ties to Cuba, supported the leftist government of Hugo Chávez in Venezuela, and is successfully creating the conditions for a new round of negotiations between the conservative, Bush-supported government of Colombia and the leftist insurgents of the FARC.
If in the domestic arena Lula’s administration has fallen short of the expectations raised among the millions of Brazilians who demanded a change of direction in the 2003 election, its international actions have brought refreshingly needed new perspectives to a world deeply divided by Bush’s arrogant, imperialistic unilateralism.
Speaking From the Backyard 